April 1, 2012

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Strategic Giving

Community Foundations Help Philanthropic Efforts

Fraser Nelson

April 1, 2012

Carnegie. Rockefeller. Morgan. While these famous philanthropists may have acquired great wealth through innovation, their traditional methods of giving are getting a run for their money.

Private endowments continue to nourish our cultural landscape. But new forms of corporate philanthropy offer the chance for all those who contribute to a company’s success, from employees to vendors, to add to the common good.

“It is the social, personal and corporate responsibility of every individual and organization to give back to their community to the extent fiscally possible,” says Mark H. Bouchard, senior managing director of CB Richard Ellis.

Businesses of all sizes have also discovered that corporate social responsibility adds to their bottom line. Companies committed to their community do a better job attracting and retaining talent, capital and customers. For example:

  • Three out of four people say it is very important to work for a company that “does good,” according to an IBM Institute for Business Value report.
  • Eighty-six percent of Americans say they are likely to switch from one brand to another that is associated with a charitable cause, and 79 percent say they are more likely to buy a product that supports a nonprofit, according to the 2004 Cone Corporate Citizenship Study.       

In short, doing good is good business. What used to be a simple matter of donating money to local causes has become a critical component of reputation management and cultivating a competitive business edge. The question facing many businesses is how to do so effectively and efficiently.          

Carlos Slim, the world’s wealthiest individual, put it this way: “Just as I think it’s important to run companies well, with a close eye to the bottom line, I think you have to use your entrepreneurial experience to make corporate philanthropy effective.”

Here is a common problem. A fast-growing company is featured in the media. Within a few days, letters from local charities start piling up on the desk of a person suddenly charged with the giving program. Meanwhile, a high-level employee’s wife is diagnosed with breast cancer. With no discussion, the company signs up to sponsor a walk for breast cancer research. Employees feel pressured to attend. In the breakroom, one employee complains that her child has autism and that their walk is happening that very same weekend. Why one cause over another? How do these decisions get made? The letters from local charities go unanswered, the strategy is scattershot and the return is clearly not what the CEO anticipated.

Build a Plan
An effective philanthropic initiative must include decisions about who will be involved and how the impact of the giving will be evaluated. Before embarking upon or expanding philanthropic initiatives, ask:

  • What is an optimal level of financial commitment? Will it involve all employees or just some?
  • Should dollars allocated to charity come from profits, the marketing or the community relations budgets?
  • What causes and issues are most important to employees? Which are aligned with its values and brand?
  • Will the company give time as well as money? Will it focus on volunteering that uses its unique business skills or focus on team-building activities?
  • How will impact be measured? By dollars raised? Lives changed? Increased brand awareness? Sales?

Community Foundations Work
Increasingly, corporations of all sizes have found that it makes most sense to work with a local nonprofit partner that specializes in grant making—a community foundation. Corporate Advised Funds available through these nonprofit, public foundations are an easy-to-establish, low-cost and flexible vehicle for corporate philanthropy.

The New York Community Trust pioneered these funds in 1931, and the Community Foundation of Utah began offering them in Utah in 2009.

These foundations work with companies to identify the causes that best match their employees’ passions and corporate values. They vet all the requests for funding, make sure they are legitimate nonprofit organizations with good financial oversight and, if desired, make recommendations regarding which requests to fund. Donations to corporate advised funds are fully tax deductible and leveraged with other investments to ensure growth and impact.

The Community Foundation of Utah is nationally recognized for its work to “engage the giving minds” of entrepreneurs through skills-based volunteering. More than 125 entrepreneurs have matched their business skills with the needs of nonprofits. The result: more efficient, effective nonprofit organizations and a new generation of leaders committed to the common good.

Everyone has a role to play in helping build community. We encourage you to consider how your company—no matter its size—can be a part of making Utah an even better place to live now and for generations to come. And remember, it is not only good for Utah—it is good for your bottom line. Learn more at www.utahcf.org. 

Fraser Nelson is the executive director of the Community Foundation of Utah.

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